How growing companies can get out of 'crisis' mode

INSIGHT ARTICLE
|
March 21, 2018

For many fast-growing companies, the most difficult problems they face aren’t around rolling out new products or finding customers. They’re around managing growth. Maybe you’ve faced these issues:

Your bank calls frequently to say that the company is running short of cash

Your staff are working hard, but are getting burned out – their jobs have expanded, but they may lack the skills and the time to meet the company’s changing needs

You’re bringing in new customers, but they’re failing to renew contracts because the company’s delivery doesn’t meet its promises

In short, your vision for your company is being dogged by “small” problems that turn out to be anything but small, because they’re holding back implementation of your business plan. It’s like trying to run in waist-deep water – that feeling of being held back from achieving a goal.

So how do you rise above the day-to-day issues to reach that goal?

Many entrepreneurs put their focus on developing two kinds of human resources:

Implementation: The company may already have robust accounting and operational systems in place, staffed by good people who are able to maintain day-to-day operations.

External advice: The company may also hire external professionals, whether on a one-time basis or through an ongoing engagement.

But as the company grows, it can be that a third kind of support is needed as well – someone with management experience, who can act as the bridge between the operational level and the strategic issues being faced by senior management.

How can the company build that bridge – cost-effectively? Three possible solutions present themselves.

1. Upgrade your controller or operations manager

Consider a growing company in which the founder had tried to plug the “finance” gap by giving his controller a new role – as head of finance. And this can work, provided the upgraded controller has the skills, knowledge and mindset to take hold of the new role. In this case, that didn’t happen – and the company made the error of not backfilling the controller role. So, the controller’s work didn’t get done – and the CFO role wasn’t being done either.

One problem with this first option is that the characteristics that make a good controller or head of accounting, such as attention to detail and the ability to manage a process, are not the same skills that make an effective CFO.

It’s the same with other aspects of the company too, such as the overall operations of the company – the people who excel at keeping the day-to-day business affairs operating may not be the best for taking on a more strategic role such as that of a COO.

So while an internal promotion has its advantages in that you have someone who is familiar with the company and how it works, they may lack the skills, mind-set and ability to think big-picture that you need to get your company to the next level.

2. Hire a full-time CFO or COO

A second solution is to simply hire a full-time individual with the skills and experience to be a CFO or COO. This will work, but in a mid-size, growing company, it may not be the best solution either.

One reason is that the right C-level talent doesn’t come cheap. Those stress-inducing calls from the bank and panicked meetings about operations schedules may stop. However, there may be a significant drain on the company’s financial resources at a time when the company needs every dollar to go towards product innovation and marketing.

Another reason this option may not work is that an experienced CFO or COO will likely be able to get the company into financial order quickly, and after that point may feel under-employed and start looking elsewhere.

It may be possible to combine the roles – CFO/COO role, maybe with some CIO responsibilities added, in order to make the position more challenging for the individual and palatable for the company, but it may be hard to find the right blend of skills.

3. Engage an experienced CFO part time

The middle way may be the best way – to get access to the experience, skills and network of a fully-functional CFO or COO, but only as much as you need.

That might involve arranging for a C-level leader who will work with your company maybe one or two days a week. This means taking full responsibility for the finance or operations function, acting as a bridge between the company’s day-to-day minutiae and the big-picture finance needs, allowing the leaders of the company to focus on what they do best – growing the company.

From our experience helping a wide range of companies fill their C-level needs on a part-time basis, we find that this works best in these circumstances:

With experience: able to hit the ground running, and can start to deliver value right from their first day on the task

Fitting in: your part-time executive must be able to fit into the management team as an integral member, able to understand the top-level concerns of the company and present solutions to those concerns.

Medium term: You need more than a consultant; you need someone able to implement as well as advise. At the same time, as your company grows, its financial complexity will grow as well, so you may need to eventually consider someone full-time in one or more management roles.

There is quite a range of individuals who meet these criteria – skilled business professionals who, for a variety of reasons, prefer to work part time. Some are retired or semi-retired, after long and satisfying careers. Some financial professionals prefer to work part time because of family commitments or other priorities.

One advantage to the part-time executive approach is that there is a good chance you can find someone with the industry-specific experience you need to help your company grow.

Rhonda Klosler is the National Chief Operating Officer of RSM Canada. Paul Nagpal is Regional Director, Toronto for the CFO Centre, www.thecfocentre.ca, which provides part-time CFOs.

Worldwide Locations

Social

RSM Canada LLP is a limited liability partnership that provides public accounting services and is the Canadian member firm of RSM International, a global network of independent audit, tax and consulting firms. RSM Canada Consulting LP is a limited partnership that provides consulting services and is an affiliate of RSM US LLP, a member firm of RSM International. The member firms of RSM International collaborate to provide services to global clients, but are separate and distinct legal entities that cannot obligate each other. Each member firm is responsible only for its own acts and omissions, and not those of any other party. Visit rsmcanada.com/aboutus for more information regarding RSM Canada and RSM International.